Tax concessions to encourage the use of environmentally friendly fuel may not be extended because of budget deficits, according to the Government.
Officials have made a preliminary decision to go ahead with plans to raise the price of ultra-low sulphur diesel when the concession expires at the end of next month.
The move has angered transport unionists, who warned that the higher fuel costs would be shouldered by passengers. The current concession of 89 cents a litre was introduced last June for six months to encourage drivers to switch to low-sulphur diesel, which is believed to produce fewer pollutants.
But the concession was subsequently extended to June this year after transport union officials petitioned the Government late last year for an extension in light of the economic downturn.
In a paper to legislators, the Government cited budget deficits as the reason the concession could not be extended. Government figures show there will be a deficit of $16.6 billion in 2001-02. Deficits are expected until 2003-04.
'We have no plans to further defer the adjustment of the duty rate beyond June 30,' the paper said.
